Study: what happens next when the stock market goes up 3 weeks in a row


The S&P 500 has gone up 3 weeks in a row for the first time since January (ie. more than 4 months).
Historically, this means that the stock market’s performance next week is not very positive: the S&P only goes up 57% of the time, and the median performance is -0.13%.
Here are all the historical cases over the past 40 years in which:

  1. The S&P went up 3 weeks in a row for the first time in 4 months, while…
  2. The S&P is above its 52 week moving average (i.e. is in an uptrend).


Click here to download the Excel file.

Conclusion

This is a short term bearish factor for the stock market on a 1 week forward basis. The probability of the S&P going up is only 57%, even though on any random week the S&P has a 60% probability of going up.
In Study: the Fed’s rate hike is short term bearish for stocks I’ve demonstrated that the stock market will probably swing sideways or make a pullback during the next 1-2 weeks before heading higher. These 2 studies are combined with the fact that the S&P is at resistance.

So the case is still the same. A little bit of short term weakness, medium-long term bullish. Focus on the medium-long term.
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